Incentives and Investment Decisions: The Effectiveness of Regional Policy

Riccardo Faini and Fabio Schiantarelli

Oxford Economic Papers, 1987, vol. 39, issue 3, 516-33

Abstract: The purpose of this paper is to illustrate how specific regional aspects can be incorporated into a simple investment model of a multiplant firm. The model has been used to ex plain investment in manufacturing in Scotland for the period 1961-79. The econometric findings suggest that factor prices are crucial in d etermining the regional allocation of investment. Empirical support h as not been found, instead, for the importance of administrative cont rols on investment in the more prosperous regions. Finally, the model has been simulated to assess the overall impact of regional policy i n Scotland during the 1960s and 1970s. Copyright 1987 by Royal Economic Society.

Date: 1987
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